The World Health Organization declared COVID-19 a global pandemic one year ago today, March 11, 2020. Since then, CEOs and their leadership teams have had to fundamentally rethink their businesses, their operations, and their future strategies as life was upended in America and around the world.
After the office moved into the home, and the impacts of the virus took hold, Americans recognized that some of our lowest paid, most overlooked workers were indeed “essential” for keeping life moving at a local and national level. Executives and entry-level employees alike were forced to integrate home and work life at a deeper, more personal level, and parents had to balance their careers with being caretakers and makeshift teachers.
The virus also exerted a disproportionately devastating impact on communities of color and whipsawed economies, employees, and families everywhere. Against this backdrop, a national movement around racial equity required CEOs to prioritize diversity, equity, and inclusion within their own organizations like never before, and issues such as worker mental health, and the role of business in supporting a healthy democracy rose to the fore.
At JUST Capital, we recognized that our mission to build a more just economy had become more urgent than ever. We were inspired by examples of corporate leaders rising to the challenge, as well as the ways that investors, advisors, and other key market influencers responded.
In many ways, the past 12 months have defined stakeholder capitalism – it’s about developing a more holistic understanding of how a company creates value. That requires new thinking about the purpose of a corporation, fresh approaches to responding to stakeholder needs, as well as better data gathering, disclosure and performance measurement. Over the past year, we have discovered a lot about what the American public expects of corporations today through our survey research, conducted in partnership with The Harris Poll.
This work, coupled with our ongoing conversations with companies, and our analysis of new data streams, has enabled us to identify three key actions we believe that every CEO should consider taking in order to come out of the pandemic in the strongest possible position.
Action #1: Assess and address the financial health and security of your workforce
All our research points to the same conclusion: Investing in your workforce is the single most important decision a CEO can make right now. Moreover, investing in your lowest paid workers can produce significant returns.
The opportunities to do this are more plentiful than you might think. Even before the pandemic, JUST Capital found that an estimated 50% of workers across America’s largest 1,000 public companies were not making enough to support a family of three, even with a spouse working part time.
To address this, JUST worked with PayPal, the Financial Health Network (FHN), and Good Jobs Institute (GJI,) to co-found the Worker Financial Wellness Initiative. Together, we are building a coalition of companies who will commit to evaluating their workers salaries and benefits to understand if they’re getting by and able to get ahead. This is a first step towards alleviating economic distress.
When PayPal CEO Dan Schulman led an internal audit in 2018, he was shocked to find that two-thirds of the company’s hourly and entry-level employees ran out of money in between paychecks. In response, he and his leadership team raised pay, reduced health care costs, granted stock awards to all employees, and provided access to personal finance education.
Research from both FHN and GJI has shown that companies that invest in their lowest paid employees’ financial health and security reduce turnover, increase productivity, and raise customer satisfaction. JUST has also found that over the past year, companies that have the most percentage of employees making a living wage have higher returns on assets, and that companies that prioritize workforce investment and training outperform those that don’t.
It is also important to note that across the country, people of color, and specifically women of color, are overrepresented in frontline worker jobs compared to the general working population. Through our polling with The Harris Poll, we found that 84% of Americans – and 89% of Black Americans – believed that the most important action a company could take to promote greater racial diversity, equity, and inclusion in the workplace is to pay all employees a living wage.
Action #2: Disclose demographic data as part of your wider Diversity, Equity, and Inclusion plans
Amid a summer of protests against racial injustice, many corporations released statements in support of the Black Lives Matter movement or for racial equity in general. Employees came to expect more than just words, however, and for the past year, barely a week has gone by without some new announcement from companies launching fresh diversity, equity, and inclusion (DEI) initiatives. The data suggests there is a compelling business case for this. As McKinsey noted in its report “Diversity Wins”: “companies in the top quartile [i.e. the most diverse] outperformed those in the fourth by 36 percent in terms of profitability in 2019, slightly up from 33 percent in 2017 and 35 percent in 2014.”
A true commitment to racial equity within your organization requires transparency and accountability, which is why we point to disclosing your EEO-1 data on the gender, race, and ethnicity demographics of your workforce as a critical early step.
Ursula Burns, former Xerox CEO, leader of the Board Diversity Alliance, and JUST Capital advisor, has become a passionate advocate on this issue. “How many more years do you say to the people who have been excluded: ‘Just hold on. Give them 10 more years. They’ll get there,'” she told CNN. “Another generation kind of goes by the wayside of people who can be helpful, who can increase shareholder value, who can represent the stakeholders and create a just corporate America.”
Over 6% of the Russell 1000 companies we track have released their EEO-1 data, many doing so in the past few months. These include Amazon, GM, Goldman Sachs, McDonald’s, and PepsiCo. Showing your employees and investors where you stand, so that you can make tangible improvements, is the key.
For more insight into actions you can take at your company, please read our “CEO Blueprint for Achieving Racial Equity,” co-written with FSG and PolicyLink, which will be expanded and updated in late April.
Action #3: Assess benefits implemented during the pandemic and carry forward those that support an inclusive recovery
Last year, our team carefully tracked every COVID-related policy implemented by the companies we cover. The speed and range of company responses was truly impressive. Yet while the pandemic’s end is on the horizon, it is important to assess which of these policies your organization developed out of necessity should be extended or become permanent.
One critically important step many companies took in the early days of the pandemic was to extend paid sick leave to employees who might not have otherwise had access – those working part-time, for example, or hourly on the frontlines. Based on our survey research, 74% of Americans wanted to see companies implement paid sick leave during the pandemic, but we found that only 20% of companies actually did so. The importance of prioritizing this benefit can’t be understated – not only does it limit the spread of the virus, it protects workers’ economic security and makes business operations more sustainable. For companies that may not have implemented extended paid sick leave benefits, or that may have already ended them, we encourage you to read our Corporate Guide to Paid Sick Leave, which explores how paid sick leave benefits employees and employers alike, and provide actionable steps for business leaders looking to deepen and/or expand their paid sick leave options.
We recently spoke with Synchrony’s head of HR, DJ Casto, about the process of implementing new benefits, and the financial services firm made some significant changes – guided, in part, by pulse surveys to learn what was most important to the company’s employees. Even when the country has fully moved beyond the pandemic, all of Synchrony’s 16,500 employees will now work from home as part of a hybrid WFH-office approach. For Synchrony, this means that many specific roles will no longer have to be dedicated to a region, which both opens up the talent pool and provides more flexibility for employees.
In addition to work from home benefits, Synchrony prioritized parental leave as well – something Casto personally understood the importance of, as a parent of young children. Synchrony started with a 10-day emergency childcare benefit, a stipend that could be used to pay any caretaker the employee chose, including a family member. Because employees had to constantly juggle their work responsibilities with those as a parent, the company upped the policy from 10 to 25 days, then 25 to 35 days, and then finally 35 to 60 days. That 60-day emergency childcare policy will remain in place past the pandemic.
The decisions a CEO makes over the next several months can determine how well his or her company fares in a post-pandemic world. Although the past year has presented some unprecedented challenges, it is clear that building a stronger economy, based on good jobs and equal opportunity for all, is now within our reach. Taking a few simple steps towards more just company performance can make a world of difference.
If you would like to learn more about any of our work mentioned above, please email our corporate engagement team at firstname.lastname@example.org.